The world's biggest banks are continuing to lend money to some of the most environmentally damaging energy and infrastructure projects despite a supposed groundbreaking protocol they agreed to seven years ago that was meant to prevent such abuses.

The claim is in a letter sent to 60 banks, including Barclays and Royal Bank of Scotland, by 86 campaign groups from 27 countries pouring scorn on the Equator Principles, signed to great fanfare in 2003. It comes as banks are come under the spotlight for funding huge hydrocarbon energy projects that fuel climate change.

"We find ourselves continuing to campaign against the very same projects that we expected the principles to prevent or significantly improve," the letter states. "Supersized dams blocking life-supporting rivers, driving thousands of people from their submerged villages and lands; huge mining projects scarring entire mountains and polluting rivers and seas with their waste; oil and gas pipelines carrying their toxic load straight through devastated forests and threatening marine sanctuaries; coal power plants belching out millions of tons of greenhouse gases into our already fatigued atmosphere; enormous paper mills with insatiable appetites that devour the last wilderness areas, etc. Much to our disappointment, the principles allow for all of these disgraces to proceed, only now in an 'Equator compliant' mode."

Banks are to meet campaign groups in Zurich next month to discuss possible reform that would limit the funding of energy projects that exacerbate climate change and make funding decisions more transparent. Among the projects causing concern is the Kashagan oil field in Kazakhstan, which is estimated to hold 13bn barrels of oil, making it the largest new find worldwide in more than a decade.

Bank insiders reject criticism of the principles arguing they provide a common standard to guide project finance decisions to which more than 60 institutions have signed up. Further reform of the principles would be a matter for individual bank groups which could destroy the existing consensus, the source added.

But campaigners state: "We are disappointed with the lack of transparency, accountability, effectiveness and true compliance with the principles and lack of progress in their development."